On Wednesday, January 17, 2018, Governor Tom Wolf proposed significant changes to Pennsylvania’s overtime rules that impact an estimated 460,000 workers. Wolf directed the Department of Labor & Industry to issue rules that raise the salary level for overtime exemptions.
What does this mean?
Pennsylvania and federal law require covered employees to be paid a minimum wage ($7.25 per hour) and overtime (time and a half for hours worked in excess of 40 hours). However, the law provides categories of employees who are exempt from overtime based on the amount of wages earned (Salary Test) and the duties performed (Duties Test).
Under current Pennsylvania law, an employee who earns $455 weekly or $23,660 annually may be exempt from overtime under the Salary Test. Wolf’s proposal increases the salary level exemption beginning January 1, 2020 to $610 per week and $31,720 annually. The salary level increases to $47,892 by 2022 and will automatically update every three years thereafter.
Thousands of Pennsylvania employees will now be eligible for overtime payment if they earn wages below the newly raised salary level. The impact of this rule, if approved, is significant for Pennsylvania employers as many current employees may lose their exempt status.
We encourage all employers to monitor the proposed rule and contact members of Stock and Leader’s Employment Law Group with questions. We will provide you with periodic updates as the rule-making process unfolds.